Independent statutory satisfaction is mandatory before acquisition initiation; notice fails when authority acts on another's directions.

A competent authority initiating acquisition proceedings under the Income-tax Act must independently form its own reason to believe and record reasons before issuing notice. Here, the authority had already closed the preliminary inquiry, later sought the Commissioner's directions on how to frame reasons, and issued the notice only after receiving those directions. That showed no independent application of mind and an impermissible abdication of the statutory function. The earlier closure also meant the same grounds could not validly support a fresh initiation. The notice under section 269D(1) and the proceedings based on it were therefore invalid and liable to be quashed.

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Issues: Whether the notice issued under section 269D(1) of the Income-tax Act, 1961 was valid when the competent authority had earlier closed the preliminary inquiry and later acted on the Commissioner's directions.

Analysis: Section 269C required the competent authority to form its own reason to believe on the statutory conditions before initiating acquisition proceedings and to record reasons for doing so. Although the power at the stage of initiation was administrative, it remained a statutory power to be exercised by the competent authority itself. The materials showed that the authority had initially decided that no action was necessary, later sought instructions from the Commissioner on how reasons should be recorded, and issued the notice only after receiving those directions. In such circumstances, the authority had not independently applied its mind and had impermissibly abdicated its function in favour of the Commissioner. The earlier closure of proceedings also meant that the same grounds could not justify a fresh initiation when they had already been considered and rejected.

Conclusion: The notice under section 269D(1) and the proceedings taken pursuant to it were invalid and liable to be quashed in favour of the petitioner.

Final Conclusion: The acquisition proceedings could not stand because the statutory satisfaction required for initiation was not independently formed by the competent authority.

Ratio Decidendi: A statutory authority must independently satisfy the conditions precedent for initiation of proceedings and cannot act on another authority's direction in place of its own statutory judgment; if it does so, the initiation is void.

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